Financials

• Rakuten Bank (5838 JP), the online banking arm of Rakuten (4755 JP), aims to raise up to around US$900m in its Japan listing in April 2023.
• RB is the largest internet bank in Japan, by number of accounts. As of Dec 22, it had 13.3m deposit accounts with a total deposit base of JPY8.8tn.
• In our earlier notes, we have looked at the company’s past performance. In this note, we talk about the updates from its recent filings.

• Rakuten Bank (5838 JP) is an online bank in Japan. It is looking to raise about US$870 million. The pricing is on 5 April and the listing is on 21 April. 
• Rakuten Bank, wholly owned by Rakuten (4755 JP), is the largest Japanese internet bank as measured by the number of accounts and customer deposits.
• The investment case rest on Rakuten Ecosystem’s competitive advantage, growth in accounts/deposits, robust loan book growth, rising margins and low NPL ratio.

• Having first introduced the three red line guidance in late 2020, the government has begun shifting its stance, and relaxing some of its regulatory oversight.
• In this note, we looked at recent news developments and how some larger developers fared against the three red lines criterion.
• Of the large developers we looked at, there are a few names which stand out which could potentially do a capital raising given their financial standing. 

• On the morning of the 16 March, consumer finance play Latitude Group Holdings (LFS AU) announced what appeared to be a “sophisticated and malicious cyber-attack.” 
• Shares were voluntarily suspended on the 20 March and were reinstated yesterday (22 March). 
• Latitude reckons no compromised data has left its systems; but its review has uncovered evidence of large-scale information theft affecting customers (past and present) across Australia and New Zealand.

• China Huarong Asset Management Co. Ltd. expects to post a net loss of 27.6 billion yuan ($4 billion) for 2022.
• Citing factors including volatility in the capital markets leading to declines in the value of some assets, business transition and the real estate industry slump.
• The bad-debt manager said it adjusted its business structure last year, resulting in less nonperforming asset acquisition and restructuring and less revenue.

• 4Q22 results release on 23rd February 2023.
• Expect NIM expansion of ~20bps quarter-on-quarter (QoQ) for 4Q22E, while FY23’s NIM guidance and updates on its Citi consumer business integration would be of focus.
• Citi acquisition to add to full year NIMs and growth prospects from FY23, despite potential uptick in asset quality risks, which should be manageable.

Road King’s FY 2022 earnings were weaker than expected. The company posted a significant EBITDA decline, owing to a reduction in property deliveries amid the COVID-19 pandemic as well as a gross margin contraction. Looking ahead, we expect Road King’s FY 2023 contracted sales to remain weak, given the absence of land acquisitions in FY 2022 and the uncertain sales pipeline. This could pressure the company’s cash collections and internal cash generation. Positively, we expect Road King’s access to financing to remain sound, supported by its good quality asset base.

Overall, the company’s credit profile remains supported by its toll-road business, with cash dividends from the toll-road JVs covering 28% of FY 2022 interest expense. We expect recurring income from toll roads to increase in FY 2023, supported by the resumption of socio-economic activities in Mainland China and contribution from Road King’s newly acquired expressway in Indonesia. We believe the toll-road assets could be monetised in the event of tight liquidity, though bondholders are unlikely to have recourse to these assets in the event of debt restructuring (given the highly regulated nature of infrastructure assets).

• Crypto markets are at their most volatile when liquidity is low.
• Prices have less support to both the downside and the upside, which could explain BTC’s rapid +17% surge since the start of the month.
• Liquidity has also become a hot topic in traditional financial markets as the banking sector reels from several high-profile collapses.

• Payout ratio rise, but expected dividend yield just around 1%
• Mainland DP booked HK$2bn Impairment provision
• Considering uncertainties in Mainland DP market and the construction process slowing down, we cut FY22-23 revenue booking in DP, thus cut revenue forecasts for 3-13% and net profit for 14-20%

• More constructive outlook this year, despite near term impact on activities from current surge in Covid-19 infections as China re-opens.
• Prefer H shares listing (2628 HK) where valuations remain more attractive despite recent rebound.
• Fair value is lifted to CNY26.60.

• Today, Rakuten (4755 JP) and Rakuten Bank (5838 JP) announced that Rakuten Bank had received TSE approval to list (English) on TSE Prime, with expected listing date 21 April 2023.
• This had been in the works since July 2022, and they selected advisors in September 2022. The low end of the offer price range seems attractive. More diligence needed.
• There will be index inclusions. Unlike SBI Sumishin Net Bank (7163 JP) which is going to TSE Standard, Rakuten Bank is going to Prime.

• Following the collapse of SVB and Signature Bank last week, Japan’s big four banks have fallen by around 15% due to their exposure to US government bonds.
• However, the Japanese banks have managed the interest rate risk far better than the collapsed US banks and therefore, we feel the price drop is unwarranted.
• With Japan likely to scrap its zero rates policy, we think this could be a rather intriguing opportunity to make generous gains on the long side in Japan’s banking sector.

• PNB Housing Finance Ltd (PNBHOUSI IN) (PHBHF) aims to raise up to US$300m via a rights issue in order to boost its capital base.
• PNBHF is the housing finance arm of Punjab National Bank and is partly owned by Carlyle, with investments from General Atlantic as well.
• In this note, we will talk about the rights issue and other deal dynamics.

• At TMA we deliver high probability outcomes by focusing on our 3 pillars of technical analysis. •1) Response to key levels. •2) Price action. •3) Momentum confirmation.
• The 2018/2020 downtrend was broken in December 2022. Q1 2023 has delivered a correction and opportunity to enter the uptrend at improved entry levels.
• March has the potential to complete a bullish monthly reversal pattern upon a month end close above 44.89 and confirm a likely multi-month 12% uptrend towards 50.67. 

For our next Corporate Webinar, in partnership with the SGX, we are glad to welcome Uni-Asia’s Group CFO, Lim Kai Ching.

In the upcoming webinar, Kai Ching will share a short company presentation after which, he will engage in a fireside chat with Smartkarma Insight Provider, Osbert Tang, CFA . The Corporate Webinar will include a live Q&A session.

About Uni-Asia

Uni-Asia Group Limited is an alternative investment group specialising in creating alternative investment opportunities and providing integrated services relating to such investments. The Group’s alternative investment targets mainly include dry bulk ships and properties. The Group also has extensive know-how and a network relating to such alternative investments and provides services relating to these investments. The two main alternative asset classes the Group focuses on are Shipping and Property.

• SGX has launched futures on the Nikkei Climate 1.5°C Target Index. The index is based on the Nikkei225 and uses screens to remove stocks that do not meet certain criteria.
• The Nikkei Climate 1.5°C Target Index has a high degree of overlap and correlation and low tracking error with the Nikkei 225 (NKY INDEX). 
• With increased interest in Climate/ESG investing, market participants can use the SGX-listed futures to get the same risk/reward characteristics as the Nikkei225 with atleast 50% lower Greenhouse Gas emission intensity.

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.

Heliad Equity Partners (HEP) reported a 3.6% decrease in net asset value (NAV) over the four-month period ending January 2023, bringing the NAV decrease since end 2021 to 45.4%. flatexDEGIRO (FTK) was the main valuation driver and remains HEP’s largest asset (38% of the portfolio). Meanwhile, HEP’s private portfolio saw successful funding rounds at Enpal and Razor Group in recent months. HEP recently issued 1.6m new shares, raising €7m in new capital to facilitate further investments. Given that the share issue was carried out at a 43.6% discount to end-January 2023 NAV, we calculate that it will result in a c 5% NAV per share dilution.

CoinShares International (CS) rapporterade en måttlig EBITDA-förlust på 6,5 miljoner GBP för FY22 (jämfört med en vinst på 121,1 miljoner GBP för FY21), som påverkades av “kryptovintern” (som följer på överflödet 2021), vilket kännetecknades av sjunkande tillgångspriser och högprofilerade konkurser. Oron förra året (framför allt kollapsen av FTX-börsen) ledde till att CS avvecklade sin spirande B2C-verksamhet och intog en mer försiktig hållning i sin division för infrastruktur för kapitalmarknader (CSCM). Trots detta är balansräkningen fortfarande sund med ett totalt eget kapital på 204,0 miljoner GBP i slutet av 2022 (jämfört med 200,9 miljoner GBP i slutet av 2021).

• Onewo (2602 HK) (OST) had raised around US$730m in its Hong Kong IPO in Sep 2022. Its six-month lockup is set to expire soon.
• OST is a property management service provider in China, primarily owned by China Vanke (H) (2202 HK). 
• In this note, we will talk about the lock-up dynamics and updates since our last note.

• For FY2022–Total Buyback of 5.9 million shares (HK$18.3 million) at average price of $3.10
• Funds Management Business – Extended Platform to provide Family Office Solutions
• Funds Management Unit – Total AUM increased 21% to US$975 million in 2022 with external capital accounting for 46.5%

CoinShares International (CS) reported a moderate £6.5m EBITDA loss in FY22 (vs a £121.1m profit in FY21), affected by the ‘crypto winter’ (which follows the exuberance of 2021), marked by declining asset prices and high-profile bankruptcies. The turmoil last year (most notably the collapse of the FTX exchange) led CS to wind down its nascent B2C business and take a more cautious approach in its capital markets infrastructure (CSCM) division. Nevertheless, its balance sheet remains sound with total equity of £204.0m at end-2022 (vs £200.9m at end-2021).

• Nordea Bank is a commercial bank established in 1820 and headquartered in Helsinki, Finland that offers personal banking, commercial banking, wholesale banking, and wealth management services.
• The bank is a financial services group that provides services such as trade finance, sales finance, securities services, cash management, bank to bank business, asset management, and fleet management among others.
• The bank has a global presence with operations in Europe, the Americas, Asia, and the Nordic region.

• SPX low due near March 27 that sets up a recovery sequence into April. Macro remains bearish into the summer months where financial sector risk is to resurface.
• Weekly MACD set to roll over from reliable resistance after the 4,000 rejection on the daily chart.
• USD holding firm in Asia and EM due to pending risk aversion. Euro rise is corrective in nature.

• Kakao Pay’s GICS sector movement from IT to FINANCIALS creates flow trading opportunities due to the subsequent transfer between KOSPI 200’s sector sub-indices.
• An outflow of ₩24.6B or 410K shares will occur. This is 0.6x ADTV. Given that the recent trading volume has further decreased, the actual impact will likely exceed 1.0x DTV.
• It will be a concentrated flow in a single trading day by a single ETF, which gives us plenty of reasons for preemptively designing a short position targeting this.

• Upcoming banking crisis will accelerate in the coming few weeks, it is very likely Fed will slow down rate hike or re-start a rate cut cycle
• To position for this:  BUY Hong Kong property developers New World Development 17 HK, Henderson 12 HK, Sun Hung Kai Properties 16 HK
• Apart from HK RE developers, buy China’s name Hang Lung (101 HK) and crypto-currency (BTC and ETH)

• A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Thailand, Korea, India and Chinese ADRs.
• ECM developments – SBI Sumishin Net Bank (7163 JP), Trial Holdings (5882 JP) and PT Trimegah Bangun Persada Tbk (Harita Nickel) (2230010D IJ) IPOs; Japan Post Bank (7182 JP) offering.
• Event-Driven developments – Toshiba Corp (6502 JP), Toyo Construction (1890 JP), Genesis Minerals (GMD AU), Pushpay Holdings (PPH NZ), Aag Energy Holdings (2686 HK), Halcyon Agri (HACL SP).  

• On 17 March (after market close), Meritz Financial Group (138040 KS) announced a share buyback program worth 400 billion won, which represents 5.4% of its market cap.
• Given the relative large size of this deal, it should have a positive impact on its share price, especially on a relative basis against its competitors. 
• The collapse of SVB Financial and uncertain investors’ reactions on the purchase of Credit Suisse by UBS will likely add to the global investors’ negative sentiment on the financial sector. 

• The UBS takeover of Credit Suisse was announced for $ 3.25 billion below Friday’s closing market capitalization of $7.87 billion.
• SNB will take the first loss of $9.7 billion and provide $100 billion of liquidity.
• Central Bank support triggers Credit Suisse AT1 capital write-downs of approximately $17.

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.

• Japfa Comfeed Indonesia
• Lippo Karawaci
• Times China

• Weekly summary of vol changes and moves across Global Markets
• Analysing ATM volatility and skew changes over the last 5 days
• We suggest a few trades to take advantage of the implied vol surfaces

• SPX and NKY top short picks near term but new low attempts will see the immediate down leg exhaust. Yield decline is exhausting.
• Increasing oversold readings set the stage for some key low on weakness. Euro bank range is 92 to 108.
• Taiwan remains our top long in Asia. Trading bounce lows in ASX, Korea and Europe look attractive/viable.

• For the better part of two decades, Singaporean real estate investment trusts (REITs) have provided an efficient and popular exposure to quality large-scale commercial properties. 
• Yet as global central banks hike interest rates to address inflationary pressures, can REITs retain their attractiveness?
• SREITs have corrected as Singaporean interest rates have increased. The question is whether higher interest rates are baked in, and which SREITs will hold up; and which ones will not?

• There seems to be no constituent change this time. However, opportunities from cap reversion are likely to lead to noteworthy passive flows.
• Ecopro BM and Ecopro Co will experience a weight movement of -4.35% and -3.68%p. On the other hand, SK Innovation will enjoy the most pleasant passive impact.
• At KODEX Battery’s March rebalancing, the Long SK Innovation Short Ecopro BM position setup provided a return of more than 10% with a similar level of impact x ADTV.

• In this insight, we discuss four companies that are likely to switch their listing from KOSDAQ to KOSPI in 2023/2024.
• These four companies include Ecopro BM, Ecopro Co, BH Co, and Nice Information Service.
• BH Co and Nice Information Service have included the agenda of transfer of the listing from KOSDAQ to KOSPI in their upcoming AGMs this month. 

• Realty Income Corporation’s sustainable growth rate has stalled, resulting in an intrinsic value below its traded market price.
• Realty Income’s market-based features, including dividend growth and low volatility, are favorable.
• However, we think the REITs valuation is a significant risk.

• SES reported an operating loss of $20.7 million, $10.6 million higher than in 4Q21, primarily due to increased personnel and lab consumables to support the development of battery cells and AI software.
• General and administrative costs ($12.5 million) and R&D costs ($8.3 million) were the primary contributors to the operating loss. 
• The company’s net loss was $9.2 million (-$0.03 per share) compared with $10.2 million (-$0.17 per share) in 4Q21.

• While the market seems to have shrugged it off, crypto – and DeFi in particular – survived an existential risk over the weekend.
• USDC was caught up in the turmoil that hit U.S. banks and depegged amidst fears it was no longer fully backed.
• We covered the reaction in centralized markets in the week’s Debrief, but given that USDC’s primary use case is in DeFi, this week we’ll examine how the depegging played out on-chain, examining trading, liquidity, and lending and borrowing, with a particular focus on the role that bots played.  

• The Link REIT (823 HK) rights offering caused some upset amongst investors. They got dilution where they did not need it, and de-leveraging from a REIT wanting to invest.
• The units fell in price, then fell some more. Then the rights started trading.
• Last week in Link REIT (823) – Nil Paid Rights Start Trading Tomorrow – The Trades I said strategy was to be long by Tuesday or Wednesday. It’s Wednesday.

• The near-term Supply/Demand Balance is helped or hurt – depending on how well the deal has been placed to retail, by overseas bank turmoil. 
• Quality of placement to retail is tough to know from outside. We have near-term offsets with both index demand and dividend looming.
• The biggest near-term differentiator in possible supply/demand outcomes is, of course, in the hands of the TSE Index team. And we just don’t know.

• Indusind Bank (IIB IN) ‘s shares saw a sharp fall of 7% on Monday.
• The fact that RBI shortened the tenure of MD & CEO to two years baffled the market. 
• Shortening of tenures by the RBI have been seen earlier also for BFSIs. The move does not explicitly indicate any fundamental deficiency, hence investors should not be too worried.

• Market participants are re-repricing risk, says iShares 20+ Year Treasury Bond ETF.
• Policymakers are in a tough spot where they need to combat inflation while also providing liquidity for the banking sector.
• iShares are once again in the spotlight as market participants are Re-re pricing risk.

• HSBC Holdings plc agrees to acquire SVB Financial Group’s UK-based business for merely £1.
• HSBC stock’s current risks pertain to a newly evolved countercyclical environment and mainstream’s “flight to safety” instead of potential structural breaks within the firm.
• In a drastic turn of events, HSBC Holdings plc (OTCPK:HBCYF) has snapped up SVB Financial Group’s (NASDAQ:SIVB) UK lending division.

• Despite its robust asset base, a structural break in the economy might tilt The Goldman Sachs Group, Inc.’s fortunes.
• The “bird in hand” dividend theory might phase out some of Goldman’s pro-cyclical risk.
• However, a scenario analysis paints an unsightly appearance.

• The Vietnamese banks should be partially shielded from the market fallout due to Silicon Valley Bank given the bank system’s lack of integration with the global financial system
• We are selective in our stock picks, given the investment climate and the challenges to capital adequacy for a number of banks; we also assess the banks’ deposit ratios
• We recommend shareholders to switch out of Vietcombank into Techcombank given its very modest valuations, attractive PEG and its strong capital ratio; VP Bank is one to watch

• The strong travel demand in Jan. and Feb. had pushed up the industry-wide ADR nearing the 2019 level due the temporary hotel shortage, Atour especially benefited from the trend . 
• Except the positive industry trend, we think the releasing of requisitioned hotels and the expansion of Atour Light are the near-term catalyst for Atour. 
• We maintain the BUY rating and raise TP by US$1.5 to US$36.5

The much-reduced level of capital markets activity in 2022 meant sharply lower profitability for Cenkos, although control over fixed costs and reduced variable compensation provided some mitigation. The group continued to focus on client service, gained share in AIM fund-raising (to 15%), has made net additions to its client base and, supported by a strong balance sheet, has made selective staff hires to strengthen its capabilities.

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.

• Delta Dunia Makmur
• Lippo Karawaci

• SBI Sumishin Net Bank (7163 JP) has introduced a price range of JPY1,200-1,260 per share in the wake of a sell-off in bank shares. Offer shares and timelines are unchanged.
• We previously discussed the IPO in SBI Sumishin Net Bank IPO: The Investment Case and SBI Sumishin Net Bank IPO: Valuation Insights. The shares will be listed on 29 March.
• Our analysis suggests that SBI Sumishin Net Bank is fairly valued at the new IPO price range. We would participate in the IPO.

• Japan became a top laggard short bet above 28,000 given our call for a domino roll. Nikkei 26,900 was our initial downside target with a primary target of 26,000. 
• India’s short from 18,000 is meeting the overshoot target at 17,100 with 16,800 a level to cover if not look for a tradable bounce. 17,700-800 is fresh sell resistance.
• SPX weakness was the call from March 6-20 so we may be seeing up for some recovery actvity in Asia after the 20th but will face headwinds come June.

• NWD has the highest gearing among all HK real estate names.  It has significantly underperformed since the rate hike cycle begun.  Now it has the biggest potential to rebound
• The stock is trading at attractive valuation, 0.27x P/B, like a distressed Chinese developer.  The major market concerns are potential earnings downgrade and dividend cut
• I am quite convicted on the stock for rebound given 1) company has clear de-leveraging plan 2) no plans for equity-raise 3) lots of corporate actions ahead to unlock value